Ukraine meat industry on fast track to recovery

By Vladislav Vorotnikov

- Last updated on GMT

Ukraine meat industry on fast track to recovery
Following several negative years, Ukraine meat producers are finally experiencing a surge in average profitability, on the back of major price rises in 2017, according to a recent study by the Ukraine Institute of Agrarian Economics (UIAE).

For instance, in 2017, the price of beef in retail jumped by 38.5% to UAH85 ($3.10) per kg of boneless meat, compared with a rise of 34.8% in 2016, UIAE said. The rise in the price of pork ranged between 38.3% and 46.1%, as it reached UAH114 ($4.10) per kg in 2017.

Meanwhile, the price of poultry increased 30.4% last year compared to 2016, reaching UAH53.90 ($1.90) per kg, UIAE estimated.

The strong rise in prices pushed up profitability in all segments of the meat industry, according to Yuri Lupenko, director of UIAE. For example, in the pig industry, average profitability rose to 13.4%, from -4.5% in 2016, which meant that Ukrainian pig farms were no longer loss-making.

In the poultry industry, average profitability jumped by 3.5 times compared to 2016, to 17.3%, Lupenko revealed.

However, the most important development was seen in the livestock industry, as beef farms stopped generating losses for the first time in almost two decades, Lupenko noted. Not taking into account the state aid keeping most farms in this segment afloat over the past few years, their profitability reached 6.7% in 2017, compared to -4.8% in 2016.

Meat prices are likely to keep going up in 2018, taking advantage of the rising demand for food in the country, plus the increase in average salaries, according to the UIAE’s report.

Production crisis over

Price relief in the domestic market has raised hopes that there will be a halt to the decline in the production of red meat in Ukraine. In 2017, Ukraine manufactured 2.3 million tonnes of meat, up 1% compared to the previous year.

Nevertheless, the situation across the industry was rather patchy, as poultry production increased by 3.5%, while pork and beef production fell by -2.3% and -4.7%, respectively, according to information released by the Interregional Union of Poultry and Feed Producers.

Irina Palamar, chairman of the Ukrainian Stock Breeders Association, speaking earlier, claimed the pig industry was entering “a golden era”​. There was a shortage of pork on the domestic market and it was pushing the price for this type of meat up, Palamar said. The shortage was provoked by the continuing spread of African swine fever (ASF), but farmers were able to take advantage of the current situation.

With this background, meat producers have started investing in expanding their production capacities once more, anticipating that the favourable situation on market prices will continue until at least 2019, Palamar revealed.

Breakthrough pledged

Ukraine’s authorities are ready to support a recovery in the meat industry, issuing state aid in the form of soft loans to farmers, said Ukraine Prime Minister Volodymyr Groysman, during a government meeting in early February.

He promised that farmers would be able to get a soft loan with state support at an interest rate of only 1%, so they would be able to achieve “a real breakthrough”​ in production performance in 2018.

Related topics: Others, Industry & Markets, Poultry, Pork, Beef

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